Question: Please answer these True or False 1 . If future interest rate volatility is zero, all future spot rates are known with certainty. 2 .

Please answer these True or False

1 .

If future interest rate volatility is zero, all future spot rates are known with certainty.

2 .

There are three otherwise

-

identical bonds: a callable bond, a putable bond, and a straight bond. The callable bond has the highest nominal spread and the highest z

-

spread among the three bonds.

3 .

In an efficient market, a firm has two bond issues outstanding. One is a callable bond and the other is an otherwise identical putable bond. The OAS of the putable bond is equal to the OAS of the callable bond.

4 .

The Z

-

spread of a corporate bond can be negative.

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